Our most recent wealth management benchmarking found that top performers—which we define as consisting of the quartile of insti­tutions that have the highest pretax profit margins—achieved a significant advantage over average performers in overall revenue growth and return on assets (RoA) over the past three years, along with significantly better price realization in every client wealth segment. Top performers also enjoyed a cost advantage, although it was much less pronounced than the RoA gap. This implies that the prime driver of higher profit margins resides on the revenue side. We also found that wealth managers can achieve a revenue uplift of from 8% to 12% by adjusting price levels, correcting unnecessary discounts, and simplifying overall pricing structures.

Our most recent asset management benchmarking revealed that the improved performance of asset managers in recent years extends beyond business fundamentals such as AuM, margins, and profitability. Managers have also excelled at rewarding their owners with exceptional investment returns, as indicated by total shareholder returns (TSR), the standard measure of gains received by a company’s owners. Over the past five years, the TSR of publicly owned asset managers has averaged 12%, surpassing many global stock markets’ robust numbers. That is a considerable feat, even if it owes something to the industry’s rebound from the financial crisis of a decade ago and to the AuM boost from strong global equity markets. Even more impressive is the performance of the top quartile of asset managers, which have delivered annual TSRs of 20%, compared with 9.1% from the other three quartiles.

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